Multiple choice

Carriage charges paid for a new plant purchased if debited to carriage account, would affect

  1. plant account

  2. carriage account

  3. plant and carriage account

  4. suspense account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When carriage on a new plant is incorrectly debited to a Carriage account instead of the Plant account, rectification requires adjusting BOTH accounts. The correct entry should have debited Plant account; the error affected both the Plant account (understated) and Carriage account (overstated). Only suspending in a suspense account or affecting just one account won't correct the error.

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